Southwestern Energy Company

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Southwestern Energy's first quarter 2021 earnings call. Management will open up the call for a question and answer session following the prepared remarks. In the interest of time, please limit yourself to two questions and re-queue for additional questions. This call is being recorded. I would now like to turn the conference over to Brittany Rayford, Southwestern Energy's Director of Investor Relations. You may begin.

Thank you, Andrea. Good morning, and welcome to Southwestern Energy's first quarter 2021 earnings call. Joining me today are Bill Way, President and Chief Executive Officer, Clay Carroll, Chief Operating Officer, Michael Hancock, Interim Chief Financial Officer, and Jason Kurtz, Head of Marketing and Transportation. Before we get started, I'd like to point out that many of the comments we make during this call are forward-looking statements that involve risk and uncertainties affecting outcomes. Many of these are beyond our control and are discussed in more detail in the risk factors in the forward-looking statements section of our annual report and quarterly filings with the Securities and Exchange Commission. Although we believe the expectations expressed are based on reasonable assumptions, they are not guarantees of future performance, and actual results on developments may differ materially, and we are under no obligation to update them. We may also refer to some non-GAAP financial measures, which help facilitate comparisons across periods and with periods. For any non-GAAP measures we use, a reconciliation to the nearest corresponding GAAP measure can be found in our earnings release available on our website. I will now turn the call over to Bill Way.

Thank you, Brittany, and good morning, everyone. We appreciate you joining us today, and I hope that all of you are safe and well. Southwestern Energy's returns-driven strategy focuses on creating sustainable value, protecting financial strength, consistently delivering leading operating and financial results, and pursuing opportunities to capture the benefits of increasing scale. We made solid gains on our 2021 plan this quarter. The business generated $88 million in free cash flow and paid down debt, as promised. We delivered production within guidance from our maintenance capital program, further lowered total cost, including well cost, and delivered drilling and completions achievements, all while remaining financially disciplined. The continuous efforts to optimize our business performance are clearly evident in this first quarter results. Postage price realizations increased 18% compared to the first quarter of 2020, while our cash flow is up 85%, highlighting another benefit of increased scale and improving performance across the enterprise. The broader market dynamics have materially improved, and fundamentals for all commodities are indicating support for higher prices. Except for the record-setting weather in February, the U.S. experienced a relatively mild winter, yet natural gas storage balances remain near the five-year average, driven by decreased natural gas supply and strong export demand. In fact, LNG gas recently reached new highs of nearly 12 BCF per day, and exports to Mexico have topped 6 BCF per day. The 2021 WTI strip price has improved over $8 per barrel since we set our guidance in February. with transportation demand improving and OPEC Plus compliance shaping supply increases to better match demand recovery. The NGL landscape also remains promising with low propane storage levels and increased global demand for both ethane and propane. We've positioned the company to take advantage of these supportive market fundamentals to capture additional value and greater free cash flow. So why invest in SWIN? We think it's very straightforward. As I said earlier, the company is expected to generate meaningful free cash flow directed to debt reduction. We've got a strong balance sheet with ample liquidity and a leading debt maturity runway. Our Tier 1 assets across almost 800,000 acres in West Virginia, Pennsylvania, and Ohio are expected to produce more than 1 trillion cubic feet of clean natural gas and base in leading liquids production this year. These assets offer flexibility from a diverse commodity profile, including prolific dry gas wells, and the highest condensate yield acreage in the Appalachian Basin. We consistently exercise discipline in our capital allocation, investing in the highest return projects across our high-quality inventory that meet our rigorous internal hurdles. We're a cost-focused operator with top quartile well costs, and we have realized broad reductions across all expense categories. Our differentiated operating capabilities are consistently demonstrated by our highly talented people operating company-owned drilling rigs, frack fleet, and extensive water pipeline networks. Our production is marketed through a diverse and right-sized transportation portfolio with access to premium markets. And foundational to all of this, Southwestern Energy is also recognized for ESG leadership. Many of today's ESG headlines are, in fact, past achievements for SWIN, including low GHG emissions and methane intensity, transparent chemical management and disclosure, responsible land use, water conservation, and leading corporate governance standards. For example, we continue to join with local and state stakeholders to always replace more fresh water back into the aquifers than we consume in our operations in the areas where we work. We've replaced more than 14 billion gallons of fresh water to date. We demonstrated our commitment to the importance of ESG by adding methane intensity to our corporate compensation scorecard and increase the overall weighting on the scorecard of ESG-related metrics. Each day, we take steps to strengthen our social license to operate by committing ourselves to a higher standard of care for our employees, our communities, and the environment. As we've done for years, we'll continue to progress our ESG efforts through actions that make a meaningful impact for our stakeholders, including the communities in which we're proud to work and live. And later this year, we'll publish our eighth annual corporate responsibility report, which will provide a comprehensive view of the company's efforts and achievements. Remaining at the core of our value proposition is a commitment to the right people doing the right things. Our success depends on the alignment of a fully engaged, diverse, and inclusive workforce nurtured by our high performing value driven culture. So as you can see, there's plenty of proof points supporting SWIN's value proposition for shareholders. Now, to get in a little more detail, I'd like to turn over the call to Clay to discuss some specific operating achievements in the quarter.

Thanks, Bill, and good morning. We continue to demonstrate leading operational execution, leveraging technology, innovation, and efficiencies to capture untapped resources, improve well performance, and drive well costs down to enhance returns. We are building on our success, executing on our 2021 plan, with production costs and activity levels on track in Q1. Let me give you some highlights from the quarter. We delivered total production of 269 BCFE or 3 BCFE per day, slightly above the midpoint of guidance. Gas production represented 79% of total production, with oil and NGLs making up the remaining 21% at approximately 103,000 barrels per day. During the quarter, we averaged five drilling rigs, two in Pennsylvania, two in West Virginia, and one in Ohio with three frack crews. As planned, we invested $266 million of capital in Q1 and expect the second and third quarter expenditures to trend slightly lower before declining in Q4, similar to 2020. We brought 17 wells to sales in the quarter, drilled 23, and completed 29. Overall, costs on wells to cells came in as expected at $628 per foot with an average lateral length of approximately 13,000 feet. As a result of our vertical integration assets and teams, we have been able to methodically increase lateral lengths across the program and realize the improved returns and efficiencies that come with successfully drilling longer laterals. We remain on track to deliver our previously guided 10 percent reduction in well costs, as well as the 15 percent increase in average lateral length. The combination of our operational execution and Tier 1 assets continue to provide differentiated well performance across both our dry gas and liquids-rich areas in the basin. In Northeast Appalachia, we brought online a three-well dry gas pad in Lycoming County with an average initial production rate of 33 million cubic feet per day per well and an average lateral length of approximately 16,000 feet per well. In Southwest Appalachia, the condensate-rich acreage continues to impress. In the quarter, we brought online a 13,000-foot super-rich well with an average 30-day condensate rate of over 900 barrels per day. Further emphasizing the quality of this acreage, at the end of last year, we brought online a seven-well pad that has continued to perform well, averaging 770 barrels per day per well in the first 90 days of production. In Ohio, we drilled our first Utica dry gas wells in Monroe County since the acquisition. The drilling portion of the wells have gone as planned, and they are currently being completed. The pad is expected to be online in the second quarter, and we are on track to deliver the $100 per foot well cost reduction that we previously guided. Innovation and technology continue to play a key role in our success. This quarter, we completed three more pads utilizing our SWIN-owned frac fleet, and the double-zipper frac design, averaging 12 stages per day and saving approximately $150,000 per well. We keep raising the bar on our operational performance and expect to continue that trend going forward. I believe we have a competitive advantage that comes from our Tier 1 acreage, vertically integrated assets and teams, and our outperformance culture. I'm excited to see the teams deliver once again this year. I'll now turn it over to Michael to discuss the financial highlights.

Thank you, Clay, and good morning, everyone. As Bill mentioned earlier, our plan is to generate material-free cash flow, which will be used for debt reduction on our path to a sustainable two-times leverage ratio. In the first quarter, we made meaningful progress toward that goal. We reported adjusted EBITDA of $382 million, net cash flow of $354 million, and free cash flow of $88 million. Consistent with our commitment to reduce debt, we lowered the balance on our $2 billion revolver by $133 million this quarter, resulting in an outstanding balance of approximately $570 million. This reduction in debt, coupled with our growing EBITDA, resulted in a decrease to our leverage ratio of 0.5 times. We expect to further delever as we move through the year and progress towards our two-times leverage goal. During our regularly scheduled spring borrowing-based redetermination, Our revolving credit facility and commitments were unchanged at an elected $2 billion, maintaining strong liquidity with asset coverage that continues to exceed the borrowing base. Our quarterly financial results were ahead of consensus, and our weighted average realized price, including the impact of hedges, increased nearly 40 cents per MCFE compared to a year ago. Despite the mild weather in the first quarter, our reported gas price differentials were better than planned, primarily due to our transportation to premium pricing locations. Looking ahead to the second quarter, we expect our realized gas differentials to be consistent with seasonal impacts in previous years, resulting in an 85 to 95 cent discount to NYMEX range, consistent with the assumptions built into our full year guidance. We expect to continue to benefit from our transportation portfolio throughout the year, and when combined with our basis hedges, we have over 80% of our natural gas production protected from widening differentials in the Appalachia Basin. During the quarter, liquids prices continue to improve, driven by supportive supply and demand fundamentals. Looking forward, we believe NGL and oil prices will remain strong, and even with the improvement in WTI, we expect the second quarter NGL price realizations as a percentage of WTI and oil differentials to be in line with our guidance ranges. To sum it up, we're off to a good start to the year with another quarter of solid financial results. Supported by the macro environment and our continued execution, our 2021 plan is expected to even further solidify our strong financial foundation. That concludes our prepared remarks. Andrea, could you please open the line for questions?

We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. In the interest of time, please limit yourself to two questions and re-queue for additional questions. At this time, we will pause momentarily to assemble our roster. And our first question will come from Charles Mead of Johnson Rice. Please go ahead.

Good morning, Bill, to you and the rest of the Southwestern team there. Good morning, Charles. How are you? I wanted to ask a question on the optionality you guys have across the products on your acreage position. Are you seeing anything either in spot prices or forward curve that are – that's leading you to kind of shift your capex one direction or the other, or are we going to proceed with the mix that you guys contemplated at the beginning of the year?

Yeah, we set the mix of our investment across the enterprise based off of strict pricing for all commodities plus basis, and we put that in our model. The good news that we've got is that at this point, Investment in any of the areas across the enterprises is comparable in terms of returns, thus our investment in both dry gas and super rich gas and in all three areas. We watch that continuously, but we're really looking more for trends a little longer term than just in the short term to be able to make those shifts. The good news also is that we have vertical integration, so we drill and complete many of our own wells, and therefore we can move about the area at will as we see those trends changing. But for right now, I think the comparative nature of economics and returns says put about 50% of the investment in dry gas across the areas that have dry gas and put the other half in liquids rich and super rich wells.

Got it. Thank you for that, Bill. And then if I could drill down, my second question, drill down a little bit more on your northeast Pennsylvania position, or I guess as you call it, your Pennsylvania position. Can you give us a sense of your remaining inventory up there and how that inventory splits between lower Marcellus and upper?

Sure, Charles. So the lower core Marcellus opportunities that we consider economic in the current environment right now are pushing somewhere around 150 to 200 locations. We have an additional couple hundred upper Marcellus locations that we're methodically testing and working through. We talked about at the beginning of the year that we were going to do a couple more upper Marcellus wells in 2021. And then there's Flatcastle, Utica inventory that came from the Montage asset that's a little further removed but looks pretty interesting. That's kind of the opportunity set that is more in the front of the line right now in Northeast Appalachia.

Got it. Thank you for that, Clay.

The next question comes from Neil Dingman of Truist Securities. Please go ahead.

Morning, guys. A couple things. One, it looks like doing well on your free cash flow could hit your goals, I think even, what, potentially before a year end. I'm just wondering, once you get to, you know, some levels that you're very comfortable with on the leverage side, you know, kind of the tip question that's been coming out, I'm just wondering, not only what you might think about doing or how you would think about allocating the shareholder return to but maybe how aggressively out of the gate, or is that something you would just sort of build into?

Yeah, no, this is Michael. I think the way you think about that is as you get to the two times, kind of what we've mentioned is, you know, your first step is you want to make sure that two times is sustainable, right? It's not just a blip on the radar. So we'll do that. Once you get comfortable that it is, then you're exactly right. Then all the options go on the table. You look at them, and, you know, there's plenty of variables that go into that decision. You know, the macro fundamentals, your outlook, how your equity is performed, you know, what you're bond trading levels are, all those types of things. We'll look at those at that time and see what we kind of view as the optimal long-term value for the shareholder at that point. But I think we want to get to that sustainable two times, and that conversation is right behind that.

That makes a lot of great details. And then just one follow-up. Maybe even versus some others, it seems like your costs are really holding in well, and I'm just wondering – Anything you might be able to comment, I don't know, not just on OFS, but maybe other costs, and then, you know, are you seeing any type of product or personnel shortages out there? It doesn't seem like it, but I thought I would ask.

No, I think that, you know, we still are going to experience, we expect through the balance of the year, a little bit of deflationary trend before we expect to see sometime next year a slight uptick. Reminder that we, you know, a major expenditure of ours is drilling and completions. We own and operate all of our own rigs, and those people are SWIN employees that we're thrilled to have. And so they're a part of the organization and the frack business as well. And so we're insulated from cost swings in that space. I think our procurement group has done a terrific job of really stretching out the horizon, contracting out longer-term expenditures where we can, obviously, Anything that requires additional resources, we've got to make sure that those are there and that they're competent to do what we need them to do. But we don't expect shortages, and I think we're in a pretty good position from the standpoint of having a right-sized business and control over some major expenditures from vertical integration.

Yeah, just an add to that would be the self-sourcing of the sand that we do through our – supply chain group, and that is also a big benefit for us.

No, definitely noticeable in your class that you kept them down. Thanks, guys.

The next question comes from Holly Stewart of Scotia Howard Wheel. Please go ahead.

Hey, Holly.

Good morning. Good morning, gentlemen. Good morning, Brittany. Maybe I'll start off here, Bill, on just the free cash flow guide. I mean, I think based on our expectations at this point, you're pretty handily going to exceed that guidance. So is it just time that you need, or I guess what do you need to see to gain comfort in sort of elevating that guidance level?

Yeah. Hey, Holly, it's Michael. I think the way we look at it, we kind of gave some some calibration data points for everyone, right, with the, you know, $2.77 and $50 oil gives you about $275 million, and then you get up to $3, and $58 oil gives you more of the $3.75. Obviously, prices have strengthened a bit since that conversation. So, you know, they change price. Prices change daily, so obviously it moves around, but you're exactly right. With what you've seen strengthened since then, you'd be on the upper end of that. So we'll continue to watch that as we move throughout the year, but you're right with your thinking.

Okay. Okay, great. And then maybe, Michael, another one for you. It looks like you paid down all that $133 on to the revolver, I guess, as you move forward with additional free cash flow in 2021. How do you think about balancing that revolver versus the 22s?

Yeah, I think, you know, the 22s we've looked at before, they're – they're funded, I'd say, with a free cash flow, right? So it's just a matter of when you want to take those out. And sometimes we've tried to take those out before and haven't had a lot of luck on early. So I think we feel very comfortable as you get to the end of this year, into next year, we'll take those out in due time if we don't take out before that. We have plenty of the liquidity to do it. So I think the focus will be on the RBL right now, and then 22 will just come in time.

Okay, and maybe one more follow-up if I could. Clay, you mentioned Flat Castle, and that was sort of a blast from the past from our montage days. And I can't recall if you said how many uppers were in the well counts for this year. So just any color you can provide on just if there's a Flat Castle program in place for this year versus an upper well count.

Sure. The upper that we planned in the budget was two straight upper Marcellus wells. So continuing to progress the trend there. The thought on the flat castle was just with a new asset there as we continue to progress our resource to reserves effort. There's some interesting EURs there that our team is doing detailed studies on. And we don't have any wells planned there in the budget this year, but we're continuing to watch it. Just a final comment there is, you know, we've been maintaining flat production. It went up a little bit last year in northeast half when we reallocated capital. But to stay flat-ish, we're somewhere around 30 wells a year. And so, you know, we've got quite a bit of lower Marcellus production to choose from in that mix and then sprinkling in the upper and continuing to progress the flat castle.

Okay, that's helpful.

All right, thank you guys.

Thank you.

The next question comes from Arun Jayaram of JP Morgan. Please go ahead.

Yeah, let me start with you, Clay. I was wondering if you could, you know, give us some thoughts on the Ohio Utica program this year. I think you're planning to do 12, 15 wells there and just some thoughts on that program. What type of recoveries per thousand do you anticipate and how does capital efficiency here compare to Swin's assets and Northeast App and Southwest App?

Sure. We talked about, we drilled our first pad there. Our teams did a great job of using our drilling rigs, incorporating the improvements around efficiency and cycle time that we've been realizing on the existing assets and bringing those over into the Ohio Utica. And those wells have gone as expected with the reductions that we had modeled in. We're currently completing them, and we expect those that will come online in 2Q. Like you said, we've guided the 12 to 15 wells there this year. We get the incremental benefit from that program of now consistently drilling Utica wells and all the learning that's going to come from that, and we keep applying that to the understanding on the SWAN legacy asset, Utica, and how we can keep bringing those costs down and keep working on the resource to reserves effort in the Utica also. So that's a nice additional benefit. With the high rate of these wells, they're going to have efficiencies that are, you know, maybe similar to our dry gas in northeast Appalachia, but with a little bit higher cost. We've got them modeled at $725 a foot well cost. which is a little elevated over what we're seeing in Northeast App because of them being deeper. But we cut $100 a foot out of what previous operators have been doing, and we expect to keep improving on that trend.

Great. That's helpful. Perhaps one for you, Bill. You and I have spoken a little bit about M&A recently, but I wanted to get your thoughts. The company has folded in Montage seamlessly, not really missing a beat there. As we think about U.S. shale consolidation, last year was a big year for public-to-public partnerships, including what you guys did with Montage. More recently, we've seen a bit more news flow with the public buying privates. Pioneer transacted, and we're hearing about more. you know, in terms of speculation around privates putting themselves up for sale. So I know you guys look at everything within the Appalachian Basin, but would love to get your thoughts on what you're seeing on the M&A front and perhaps your thoughts on potentially looking at consolidation within the basin or other, call it natural gas place, such as the Haynesville.

Yeah, I appreciate your question. As you know, we continue to believe in consolidation, as we've talked about before. But we believe in it in accordance with our very well-established framework. And that framework leads off by doing the right deal the right way. And I'll use our montage acquisition as evidence of that. That's a screen for how we look at any opportunity. And we continue to study ideas. We continue to think that consolidation makes sense and where you can bring those ideas into some kind of an opportunity. and then get that opportunity done the right way and make the right deal for shareholders, then we'll consider it. Until then, I think that we'll watch the market. We'll watch our core competencies and capabilities and how we might leverage those and come back to you sometime in the forward world when we identify something that's of interest to us in line with all of that. Great. Thanks a lot.

The next question comes from Umang Chandra of Goldman Sachs. Please go ahead.

Hi, good morning, and thank you for taking my questions.

Good morning.

I wanted to follow up on your comments around consolidation. Can you remind us again what are the key considerations when you assess these opportunities with respect to either the macro or with respect to the micro considerations?

Yeah, I mean, obviously, We've got a very rigid framework, and that includes issues like I just spoke about in finding the right deal that can be done the right way, and we can bring the value to the shareholders. Certainly, synergies are important. But when you look at sort of the way we evaluate these, it's all of the major balance sheet metrics and being accretive to those. We're going to protect our balance sheet. We're going to look for and study deals that... are creative on each of the critical metrics that matter to shareholders. We're gonna watch the contribution of any future debt to those kinds of things. And again, we've got an objective to get to sustainable two times and we're right positioned well to do that. So we're not gonna undo the progress that we've made in any respect. I think as you look at the macro They've got to be strong returns and we've got to have an ability to hedge those returns to assure that the commitments that we made are delivered. The complimentary nature of our existing business to opportunities and again, the critical skills that we believe we have that differentiate us from an operating perspective are important so that we can deliver the value we said that we're going to deliver. So kind of the right to own, meaning the right deal done the right way and assuring execution of that deal. So that's the primary drivers that we look at.

Thank you. That was really helpful. And a quick one from me. How do you define sustainable leverage of two times? Is it at a particular gas price or oil price? And if yes, could you share that with us?

Yeah, I think it's not necessarily a definition calculatable number, but I think as you look forward, you have to feel comfortable that it's sustainable with your expectations of the forward strip, right? And you can see what we're doing this year with stripped around 275, 280 type number I think to the extent that that softened a bit, you'd obviously want to make sure you had a little bit of cushion there to get, you know, any kind of uptick from a blip on the commodity side. But it really revolves around that, Imam. It's what your outlook is and your business plan, even though you plan to generate. Got it. That's helpful. Thank you.

Next question comes from Noel Parks of Tui Brothers. Please go ahead.

Good morning. Good morning. I wondered, you touched on it a little bit in Monroe County, but you mentioned improving cycle time. But beyond that, could you just walk through what the components are of that $100 a foot well-cost improvement you're looking to realize out there? I'm assuming some of that might also be on the completion side.

Yeah, definitely. It's a combination of drilling completions and facilities, just like we've driven the cost down in the SWIN legacy assets. And it's more efficient drilling. The benefit of our supply chain on the cost side the benefit of how we're going to complete the wells, the work we do on prefab and facilities so that we lower costs, and then shortening the overall timeframe to get the wells from spud to turn in line. So it's a combination of all the things that we've done on our legacy assets.

Great, thanks. Just turning a bit to a little bit of the macro environment. Actually, instead of that, let me ask you about the Utica. You also mentioned that with what you're learning from the montage assets that you're looking to apply some of that to the legacy Southwestern Utica. And you, as best I can recall, you did pretty little with the Utica in the year or two before montage. So do you have a sense of, I don't know, is there maybe a linchpin of improvement that could bring that legacy Utica back you know, much closer to being able to compete for capital?

Yeah. So, I mean, in general, we always talk about how we focus on our full inventory of opportunities and continue to bring that resource to into the economic arena. And that's what I'm speaking of with the Utica. The learning lab of drilling wells right now in Ohio is benefiting the cost side of that. We've got significant lower Marcellus opportunities that we're continuing to develop right now. So none of this legacy Utica is imminent by any means. It's just a way to keep improving the economics of the deeper inventory bench that we have.

And I think a lot of our success in some of these newer areas, I believe, is supported by our team's disciplined and methodical approach to extending their knowledge, proving up the concept, and then delivering exactly what they said. The analogy can be how we've drilled these ultra-long laterals. We didn't go from 10,000 feet to 25,000 feet all in one go. just to show that we can drill long laterals. There was a very methodical test approach, timely as well, but disciplined that brought great success. So when we can learn out of a live reservoir, apply those learnings to ours, to the legacy, it's a great thing to do. The extensive inventory we have in Marcellus means there's no rush, and we can continue to build that position.

Thanks a lot.

Once again, if you would like to ask a question, please press star, then one. And the next question will come from Carl Blunden of Goldman Sachs. Please go ahead.

Hi, good morning. This is Joe Rokosan for Carl. You've made good progress so far in 2021 towards your balance sheet targets. Just wondering if you would consider going significantly below that two turns target, and if the goal on the revolver balance is to actually bring that to zero?

Yeah, I think on the first part of the question, the two times, yeah, I think that's possible. You could, I mean, when we say sustainable times, it's for even when things get a little bit more challenging, you want to make sure you're controlling the balance sheet and keeping it strong. You know, I think as you get to that two times, you reassess, as I mentioned earlier, on a bunch of different variables to see is it prudent to go a little lower? Is it prudent to start the return capital shareholders as a combination of both? So I think all that would be considered. What was the second part?

Just if the goal on the revolver balance is to actually bring that to zero.

Oh, yeah, yeah, yeah. I think that's right. I mean, we view the RBL as temporary debt that should be paid down with free cash flow. I think you've seen a lot of people go out there and extend theirs and refinance them with long-term notes and make it a little bit more permanent debt. We're not quite aligned with that thinking. We focused on strengthening the balance sheet and knocking out that temporary debt, and so I think that's what you'll see us focus on.

That makes sense. Thank you. And then just for my follow-up, I appreciate the commentary on the 22s. You know, at what time do you start to think about the longer-dated notes?

Yeah, I think it's definitely something we stay aware of. I mean, we do work on it even now. We're watching what we could do, what options are out there. The debt markets are much improved of where they were when we went to the market in August, so it's something you look at. I think you balance refinancing things at an appropriate level but not do it too early and obviously look at all the costs associated with that kind of activity. definitely something we keep up to date with and something that we could look at doing. But the nice thing about our maturity runway is it gives us that flexibility to only do it if it's opportunistic.

Understood. I'll turn it over. Thank you.

Thank you.

The next question comes from Subash Chandra of Northland. Please go ahead.

All right. Thanks. Good morning. I think you guys were one of the first companies to do a responsibly sourced gas deal, maybe it was with New Jersey Resources, possibly for premium gas realizations. Could you comment on, you know, how that might have worked out if you see this as an emerging opportunity or still a bit of a, you know, science project out there? And just your thoughts in general on getting paid for your superior, you know, ESG achievements?

Well, we certified our first wells a few years ago. We executed several pilot agreements, actually, in several states. And coupled with our position in GHG and methane intensity, along with all of our other ESG positioning, whether it's chemical disclosures or leading practices in ESG, I think that it positions us well as a candidate for future transactions. We have a number of wells that are certified, and we've got a number of potential opportunities that we're working as we speak. And so when those are complete, we can talk a bit more about it. But we believe that it's the right thing to do, and it's completely aligned with our view on ESG, and that's not just a new practice. It's something we've been doing for years, and we'll continue it.

Got it. And just to follow up on that. So is there a commercial advantage in doing this as well? Are these deals being done so you get a premium netback?

Yeah, this is Jason. So I think, yeah, I think so that's the, you know, that's our goal is, you know, trying to figure out how to monetize our environmental proven performance in extremely low methane emissions. So that's the goal from a sales perspective and an opportunity that's out there.

Okay, great. Thanks. Look forward to the next transaction. Thank you. Thanks.

This concludes our question and answer session. I would like to turn the conference back over to Bill Way for any closing remarks.

Thank you, and thank you to everybody who joined us today. I think we're off to a great start in the year of a year that looks quite promising and filled with opportunities as we move ahead. So thanks for your call. Thanks for being on the call. Thanks for your questions, and thanks for your support of Southwestern Energy. Have a great weekend. Take care.

This concludes the Southwestern Energy's first quarter 2021 earnings call. You may now disconnect.